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HMRC Made A Valid Discovery Despite Tax Return Disclosures

By Mark McLaughlin, April 2016
Summary

The level of disclosure in the appellant’s tax return of a tax scheme was insufficient to prevent HM Revenue and Customs (HMRC) from making a valid discovery assessment, based on the condition in TMA 1970, s 29(5).

Background

The appellant submitted his tax return for 1998/99 in February 2003. The return disclosed a chargeable gain of almost £1.8 million, against which losses were set, which amounted to more than £2 million. Details of the losses were included in the ‘white space’ section of the appellant’s tax return using a specific form of wording settled by leading counsel, which had been supplied by the promoter of the tax scheme (‘The Castle Trust Scheme’) used by the appellant to reduce his liabilities in respect of the chargeable gain.

HMRC issued a discovery assessment (under TMA 1970, s 29) in December
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